The FTA's penalties are automatic, and many apply even when you owe no tax. Whether you have already received a fine or simply want to stay clear of one, SKM International helps you understand the penalty, fix the underlying problem, and — where it is possible — apply to have it reduced or waived. Big Four-experienced chartered accountants, serving the UAE since 2006.
Most penalties trace back to a missed registration, return or deregistration — go straight to the fix.
Since 2026 the FTA has moved firmly from awareness to enforcement. Penalties for VAT and Corporate Tax are now applied automatically through EmaraTax — and the most common ones apply even if your business owes no tax at all.
The penalty framework for VAT and Corporate Tax was brought into line under Cabinet Decision No. 129 of 2025, effective 14 April 2026. The headline change: late payment is now a flat percentage per year, and the same logic applies across both taxes.
The three penalties that catch most businesses are late registration, late filing and late payment. They are automatic, they are applied without warning through EmaraTax, and — importantly — late registration and late filing apply regardless of whether any tax is actually owed. A business that made no profit and owed nothing can still be fined for filing its return a day late.
The good news is that most penalties are avoidable with the deadlines tracked properly — and where one has already been issued, there are sometimes routes to reduce or waive it. SKM International helps on both sides: keeping you compliant so penalties never arise, and dealing with the FTA when one already has.
The key administrative penalties for VAT and Corporate Tax, as they stand in 2026. Figures are indicative — always confirm your specific position with the FTA or with us.
Figures reflect the UAE position as at 2026, including changes under Cabinet Decision No. 129 of 2025 (effective 14 April 2026). Penalty rules can change and depend on your circumstances — confirm your specific position with the FTA or with us before acting.
A penalty is not always the end of the matter — and even where it stands, fixing the cause stops it growing.
First, we work out exactly what the penalty is for — late registration, filing, payment, deregistration or an error on a return — because the route forward depends entirely on the cause. Then we fix the underlying problem: getting you registered, filing the overdue returns, settling the tax, or preparing a voluntary disclosure, so the penalty stops accumulating.
Where the circumstances allow, we help you apply for a reduction or waiver through the FTA's processes — for example, the Corporate Tax late-registration penalty that can be waived when the first return is filed within the qualifying window. We are honest about when a waiver is realistic and when it is not, so you are not chasing something that will not happen.
Penalties grow month by month. Send us the details and we will tell you what it is, what it will cost if left, and what can be done about it.
Almost every penalty comes down to a missed deadline. Four habits keep you clear of them.
Failing to register for VAT or Corporate Tax by your deadline carries a fixed penalty of AED 10,000, and it applies even if no tax is owed. For Corporate Tax, this penalty can in some cases be waived or refunded if your first return or annual declaration is filed within seven months of the end of your first tax period. If you are already late, registering quickly is what limits the exposure.
Filing a return late attracts AED 500 per month for the first twelve months, then AED 1,000 per month thereafter. This applies even when your taxable income or VAT due is zero — a nil return still has to be filed on time, and is penalised if it is not. The penalty for late payment of any tax due runs separately, on top.
From 14 April 2026, under Cabinet Decision No. 129 of 2025, the late-payment penalty is a flat 14% per annum on unpaid tax, charged from the day after the due date with no ceiling. It accrues for as long as the tax is unpaid, so on a larger liability even a few months' delay becomes significant. This replaced the older tiered penalty structure.
Yes — and this catches many businesses out. Late-registration and late-filing penalties apply regardless of whether any tax is due. A company that made no profit, or a VAT-registered business with a nil return, can still be fined for registering or filing late. Only the late-payment penalty depends on there being unpaid tax.
Sometimes. The FTA has specific routes in some situations — for example, the Corporate Tax late-registration penalty can be waived or refunded when the first return is filed within the qualifying window. Other reductions depend on the circumstances. We assess whether a waiver is realistic in your case and handle the application, and we are honest when it is not worth pursuing.
Do not ignore it — several penalties grow month by month. Send us the details and we will identify exactly what it is for, fix the underlying issue so it stops accumulating, settle what is genuinely owed, and where possible apply to have it reduced or waived. Acting early almost always costs less than waiting.
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